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Questions from eECOM-LAC

  • To: "gtld-guide@xxxxxxxxx" <gtld-guide@xxxxxxxxx>
  • Subject: Questions from eECOM-LAC
  • From: Glen de Saint Géry <Glen@xxxxxxxxx>
  • Date: Mon, 8 Dec 2008 11:39:17 -0800

Forwarded on behalf of Tony Harris
(please see attached document)

eECOM-LAC, the Latin America and Caribbean Federation of Internet and 
Electronic Commerce, has been part of the group that worked for more than two 
years, within the context of the GNSO, to produce a consensus-based set of 
recommendations that would facilitate the introduction of new gTLDs.
The current Draft Applicant Guidebook and related Memoranda which have been 
published for comment, prompt us to formulate these initial observations and/or 
questions. The texts referred to are in blue, and our comments are in black.

Evaluation Fee
The Evaluation Fee is designed to make the new gTLD program self-funding only. 
This was a recommendation of the Generic names Supporting Organization (GNSO). 
A detailed costing methodology - including historical program development 
costs, and predictable and uncertain costs associated with processing new gTLD 
applications through to delegation in the root zone - estimates a per applicant 
fee of $US185,000. This is the estimated cost per evaluation in the first 
application round.
The first consideration is that this fee is substantially higher than the USD 
50.000 application fee charged to applicants in the previous round. Thus new 
applicants are essentially suffering discrimination vis-a-vis previous round 
applicants, who were not burdened with such a significant application fee. It 
is particularly discouraging to non-profit applicant initiatives, who may not 
be targeting large numbers of potential registrants, and some of whom have 
already expressed their inability to participate due to this fee.

The following statement is also noteworthy: "If ICANN receives 500 applications 
in the first round (as forecast), the total fees to ICANN would be 
approximately $92.500.000 for the first application round." (EM-Cost 
considerations page 3).

This is a very significant amount, and it is difficult to conceive how the 
evaluation and processing of 500 applications, which follow a standard template 
format, will most probably have a limited character entry per field, and will 
allow limited margins for applicant confusion and data-entry errors, can 
justify charging almost USD 100 million...
The total fee per applicant takes into account close to $US13 million invested 
by ICANN since October 2007 to put the design of the implementation program in 
place. It includes allocated staff time, direct consulting expenses and other 
fixed costs. This cost will be allocated across the new gTLD applications until 
it is reclaimed and amounts to $US26,000.
Comments from the floor during the Cairo Public Forum, interestingly suggested 
that ICANN as a non-profit entity has no obligation to seek recovery of past 
expenditures from ongoing processes involving the community. We would further 
add that these expenses were, after all, incurred in fulfillment of ICANN's  
"foundational principle...to promote competition in the domain name 
marketplace..." Thus they might well have been spent on activities that ICANN 
is committed to undertake, and not be considered as "extraordinary" and 
requiring recovery.
The fee also includes $US100,000 per applicant relating to both fixed and 
variable costs of processing each application.
We would calculate that fixed costs relate to ICANN Staff dedication and Panel 
Evaluators' stipends, which combined should not be in excess of $US 25.000 per 
application. The Objection Filing and Applicant Response process requires both 
objector and applicant to pay the DRSPs, and thus does not impact ICANN with 
these direct additional costs. Then there is the transition to delegation 
phase, which would involve ICANN legal/technical staff and perhaps could 
justify an additional $US20.000 in variable costs. The $US100.000 would seem 
rather excessive.

A final element of the evaluation fee is a provision for risks related to 
non-standard processing of applications, or the application and evaluation 
process. An analysis of these and other risk elements performed by independent 
specialist, Willis Inc, the world's third largest insurance broker and risk 
consultant. This analysis identified approximately $US60, 000 to be allocated 
to each application.
With all due respect to this undoubtedly qualified opinion, we would point out 
that not all applications will necessarily result in "non-standard processing 
of applications" and other potential risks, and thus all applicants are being 
"punished" for a few potential "entangled" applications.  Here again this 
concept was not applied to previous round applicants, and thus is 
discriminatory against new applicants.
It is possible ICANN will over-collect or under-collect for the first round of 
applications. If fee collection exceeds ICANN expenses, the community will be 
consulted as to how that excess is to be used.
Firstly the concept of "over-collect" would not appear to be an equitable 
practice. Since ICANN has spent "close to $US13 million" which includes direct 
consulting expenses for the implementation program, it would seem logical that 
some degree of certainty on the costs could have resulted, that could 
considerably reduce any potential for "over-collection".

3.3.2 Response Filing Fees
At the time an applicant files its response, it is required to pay a 
nonrefundable filing fee in the amount set and published by the relevant DRSP, 
which will be the same as the filing fee paid by the objector. If the filing 
fee is not paid, the response will be disregarded.
This does not seem fair to the applicant, who must pay a significant 
Application Fee as it is, which already includes a provision for "risks" in the 
amount of $US 60.000, plus the $US 100.000  "relating to both fixed and 
variable costs of processing each application". It is appropriate that the 
objector pay the filing fee, as this will lessen the posibility of "spurious" 
objectors coming forward.
Annual Registry Fee
Building on existing registry fee models, new gTLD registry fees are projected 
to be the greater of $75.000 of approximately 5% of registry transaction 
We respectfully suggest that this is unfair on new entrants, and that it would 
be far more just to apply a percentage fee at least for the first three years 
of operation, to give the new registry time to develop a registrant customer 
base. One alternative would be to apply this percentage concept only to 
non-profit applicants. To avoid any "gaming" of this option, non-profit 
applicants should be entities that have been duly registered/incorporated as 
such, at least two years prior to application date.

It is obvious that the enforcement of a high Annual Registry Fee, will most 
likely result in higher costs to the end registrant, and will thus be in 
detriment of market development, and the generation of more competition in the 
domain namespace.

To Summarize

The initiative to introduce new gTLDs into the namespace, will contribute 
substantially to the fulfillment of ICANN's foundational principle "to promote 
competition in the domain name marketplace". It would seem essential that, in 
the eyes of the global community, ICANN not be seen as turning away potential 
new entrants from the non-profit, cultural, indigenous community and NGO 
sectors, by demanding overwhelming payments from them which preclude their 
participation. ICANN deserves better...
We would thus urge ICANN to reconsider the fee structure as it applies to new 
applicants, with a view to:
*       Reducing the Application Fee
*       Refraining from the 'minimum fee' stipulation for the Annual Registry 
Fee, at least during the initial 3 years of operation of the new string.
*       Eliminating the requirement for applicants to pay DRSPs when responding 
to an objection.

Glen de Saint Géry
GNSO Secretariat

Attachment: AAA-DOT LAT-COMMENTS I (2).doc
Description: AAA-DOT LAT-COMMENTS I (2).doc

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